Prospects for 2nd Straight Shutdown Grow in New Jersey

The chance that New Jersey’s state government could shut down for the second straight year appears to be growing as Gov. Phil Murphy and Democratic legislative leaders wrangle over taxes and Murphy’s proposed $37.4 billion budget.

There’s a little under a month until the freshman Democratic governor and the Legislature must enact a balanced budget, and Democratic Senate President Steve Sweeney and Assembly Speaker Craig Coughlin have been reluctant to embrace Murphy’s proposed nearly $1.7 billion in new taxes.

On Friday, Murphy counsel Matt Platkin ordered state agencies to begin preparing for a possible shutdown, and Murphy-appointed Treasurer Elizabeth Muoio ordered a spending freeze for the current fiscal year citing concern over the fund’s “fiscal health.”

Murphy says the new revenue is needed to fund pensions, school aid and other programs, including his calls for expanded preschool and community college. He has called for financing the programs by raising income taxes on millionaires, increasing the state’s sales tax from 6.625 percent to 7 percent and expanding it to services like Uber and Airbnb.

Sweeney and Coughlin have balked at the notion of raising taxes. Another issue is how to distribute K-12 aid to schools, with Sweeney calling for reworking Murphy’s formula to help districts receiving less state cash.

A balanced budget must be enacted by June 30.

Murphy used a baseball analogy last week to describe budget negotiations as being in the sixth inning, but Sweeney contradicted the governor and said it was more like the second inning.

Last year Republican Chris Christie and lawmakers failed to enact a budget resulting in a shutdown over the July 4 weekend. The stalemate ended after aerial photos showed Christie and his family on a state beach that was closed to all but the state’s first family because of the shutdown.